(Repeats to additional subscribers)
* One poll on Friday showed 10-point lead for "Leave" camp
* Asian markets see worst day in four months
* Frankfurt, Paris lower, FTSE outperforms
* Bank stocks among hardest hit, down more than 2 percent
* Sterling at 8-week low vs dollar, yen soars
By Patrick Graham
LONDON, June 13 (Reuters) - Fears that Britain may be on the
verge of voting to leave the European Union next week coursed
through global financial markets on Monday, sending Asian and
European shares sharply lower and the pound to an eight-week
low.
With growth looking shaky, worries that the "Brexit" vote
could tip Europe back into recession have moved to the head of a
list of concerns for investors which includes banks' problems
with negative interest rates and dangerous imbalances in China.
A poll late on Friday gave Britain's "Leave" camp a 10-point
lead, knocking sterling back by almost 3 full cents against the
dollar and driving the worst losses for Asian stock markets in
four months. European shares .FTEU3 fell 1.5 percent and Wall
Street was set to open 0.3 percent lower.
Other polls have been tighter, but money markets have now
abandoned expectations, high just weeks ago, that the U.S.
Federal Reserve could raise official borrowing costs on
Wednesday, just 8 days before the UK vote. Instead, the worry is
that the Fed could use language that quells expectations of a
move this year at all.
More broadly, after eight years of ultra-low rates and
outright money-printing, investors wonder if central banks have
much ammunition left should the uncertainty that a Brexit would
bring for thousands of businesses weaken demand and investment
further.
"We're in uncharted territory in front of the Brexit vote,
and then there's also the Fed this week. So the wall of worry is
quite high at the moment," said Zeg Choudhry, managing director
at LONTRAD.
"All the banks are a little bit lower, and they're the ones
which are likely to get hit. For the next two weeks, you've got
to be slightly mad if you've not got your money in defensive
stocks."
The news out of China was also poor, with data showing
fixed-asset investment slipped below 10 percent for the first
time since 2000. Stock markets in Tokyo, Hong Kong and Shanghai
all fell by around 3 percent. .HSI .SSEC
Moves in Europe, where investors have been preparing for the
British vote for months, were only slightly more subdued. The
Frankfurt .GDAXI and Paris .FCHI stock exchanges both fell
around 1.2 percent.
The index of major European bank shares fell 2 percent.
.FTMIB It has been hammered this year by concerns that lenders
will struggle as long as they are effectively paying central
banks to deposit cash. Any new retreat in expectations for
growth and inflation would only worsen that picture.
In contrast, Britain's FTSE 100 .FTSE fell just 0.4
percent, and both Deutsche Bank (DE:DBKGn) and JP Morgan said they remained
overweight UK equities into the vote.
"In the case of a 'Leave' vote in the UK referendum ... we
expect UK equities to outperform the European market, given the
likely GBP (British pound) depreciation in such a scenario as
well as the market's defensive sector structure," Deutsche Bank
strategists said in a note. BREAK
On currency markets, sterling fell almost 1 percent against
the dollar GBP= after sinking by as much as 3 full cents in
value on Friday. It was down by more, 1.2 percent, at 79.86
pence per euro. EURGBP=
Options market pricing EURGBPVOL= showed expectations for
the biggest swings against the euro on record, and analysts at
UBS raised the prospect of a cut in British interest rates and
another round of quantitative easing if the economy struggles
after the referendum.
"If activity does slow further beyond the end of the second
quarter, the market is likely to rapidly start considering how
(the Bank of England) may choose to enact any further easing,"
economists from the Swiss group said in a note.
The Bank of England meets on Thursday. BOE
Traditionally investors' first choice in times of financial
and economic stress, the yen climbed 1 percent against both the
dollar and euro. JPY= EURJPY=
Those gains took the Japanese currency past long-term
resistance around 106.50 yen per dollar and put more pressure on
the Bank of Japan to act against the currency's 14 percent rise
this year when it ends a regular meeting on Thursday.
"While the pound is the worst-performing G10 currency versus
the dollar this year, the yen is by far the best," said Derek
Halpenny, European Head of Global Markets Research at Bank of
Tokyo-Mitsubishi in London.
"The continued surge of the yen will lift expectations that
the BOJ may surprise the markets and announce some additional
monetary easing."